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A Hiddleswift insurance scheme? Sign us up

By Jeff GuoThe Washington Post

Wed., July 6, 2016

Proving that people will create markets in everything, Chinese news agency Xinhua reports that Taylor Swift fans in China have been buying insurance to hedge against the possibility — or, perhaps, probability — that she will dump her alleged new beau Tom Hiddleston.

The odds were surprisingly favourable, given T-Swift’s habit of using her exes as fodder for vengeful, chart-topping pop songs. Bookies on Taobao, China’s version of Amazon, offered to give bettors twice their money back if Swift and Hiddleston called it quits within the year.

Hundreds of fans took up the deal. “These stars break up all the time, which gives us the opportunity to earn a lot of money,” said one buyer, according to Xinhua.

Taobao this week shut down the practice, calling it a form of gambling, which is illegal in China. And it is hard to verify the details of how the wagers worked. But the concept of betting on celebrity breakups highlights the porous and perhaps arbitrary boundaries between gambling and just plain finance.

For some, you see, the bet on Swift’s and Hiddleston’s love life was a type of insurance.

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Insurance is an idea as old as civilization. Two thousand years ago in Mesopotamia, caravan leaders would make a special kind of bet with local merchants. At the beginning of a journey, caravan leaders would take money from the merchants, promising to pay them back double at the end of the trip. But if the caravan was waylaid by raiders, the merchants would lose the bet — and lose all their money.

This was a way of spreading around the risk of travelling in ancient times. The caravan leaders were betting against themselves. If they made the trip successfully, they were on the hook for a lot of money. But if their caravans were stolen, the loan was forgiven.

Fast forward a few millennia and we have the “Hiddleswift” insurance scheme, in which fans were betting against Swift’s chances at everlasting love. Why would anyone do such a thing? Surely there were many speculators solely looking to profit. But this seems like the perfect financial product for a hardcore fan whose own happiness depends on Tay-Tay’s.

For Swifties, watching their favourite pop star go through another breakup might trigger real, physical pain. If they purchased an insurance policy, fans could at least use their profits to buy themselves some ice cream or tissues.

This is of course, the same way that life insurance works. You’re betting against yourself. You’re wagering that something catastrophic will happen to you, in which case the insurance company will have to pay your heirs money. Obviously you’re hoping that won’t happen, but it’s nice to know that there will be some silver lining to that terrible scenario.

Life insurance, by the way, was also looked upon with suspicion a few centuries ago. It literally involves betting on death, which people thought was unholy and disgusting. Citing the sanctity of human life, French King Louis XIV outlawed such contracts in the 17th century. Even by the 1800s, when life insurance became a huge and lucrative market in the United States, people still regarded it as a tainted industry dealing in “dirty money,” according to Princeton sociologist Viviana Zelizer.

In a way, insurance policies are a replacement for friends. If you experience heartbreak, you might expect a group of your friends to come over with pints of Rocky Road; you’d certainly do the same if it happened to them. But what if you could buy insurance instead? Essentially, you would be making a deal with thousands of other anonymous people: you’d all send money, periodically, to whomever needed it the most.

It’s probably more of a stretch if you’re taking out an insurance policy on someone else’s heartbreak. That starts to sound like a speculative bet instead of a financial product. But is there something fundamentally wrong with that?

We bet on sports, who will become president, which way the stock market will go tomorrow and financial products linked to other financial products linked to other financial products. It was these latter investments, after all, on insurance products called credit default swaps, that helped create the 2008 financial crisis. (And Wall Street is getting back into the game today.)

And besides, has the Chinese government seen how obsessed Taylor Swift’s fans are?

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